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Before the Postal Regulatory Commission Washington, D.C

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Before the Postal Regulatory Commission Washington, D.C Postal Regulatory Commission Submitted 3/20/2017 11:47:27 AM Filing ID: 99503 Accepted 3/20/2017 BEFORE THE POSTAL REGULATORY COMMISSION WASHINGTON, D.C. 20268-0001 STATUTORY REVIEW OF THE SYSTEM ) FOR REGULATING RATES AND CLASSES ) Docket No. RM2017-3 FOR MARKET DOMINANT PRODUCTS ) DECLARATIONS SUPPORTING COMMENTS OF ALLIANCE OF NONPROFIT MAILERS, ASSOCIATION FOR POSTAL COMMERCE, AND MPA—THE ASSOCIATION OF MAGAZINE MEDIA (March 20, 2017) Matthew D. Field David M. Levy Ian D. Volner Eric S. Berman VENABLE LLP VENABLE LLP 600 Massachusetts Avenue, N.W. 600 Massachusetts Avenue, N.W. Washington DC 20001 Washington DC 20001 (202) 344-8281 (202) 344-4732 [email protected] [email protected] [email protected] [email protected] Counsel for Association for Postal Counsel for Alliance of Nonprofit Commerce Mailers and MPA–The Association of Magazine Media CONTENTS 1. Meta A. Brophy, Director, Procurement Operations, Consumer Reports, Inc. 2. Tracey Burgoon, Director of Direct Marketing, Disabled American Veterans. 3. Rita D. Cohen, Senior Vice President, Legislative and Regulatory Policy, MPA. 4. Jerry Faust, VP–Print & Distribution, Time Inc. 5. Craig Finstad, Assistant Vice President, Direct Response, American Lung Association. 6. Sandra Miao, Director of Membership, National Wildlife Federation. 7. Michael Nadol, President, PFM Group Consulting, LLC. 8. David O’Sullivan, Postal Affairs Manager, Guideposts. 9. Michael Plunkett, President and CEO, PostCom. 10. Quad/Graphics. 11. Bob Rosser, Director Postal Affairs, Products and Services, IWCO Direct. 12. Wendy Smith, Assistant Vice President Fulfillment & Postal Affairs, Publishers Clearing House. 13. Halstein Stralberg, consultant to Time Inc. BEFORE THE POSTAL REGULATORY COMMISSION WASHINGTON, D.C. 20268-0001 STATUTORY REVIEW OF THE SYSTEM ) FOR REGULATING RATES AND CLASSES ) Docket No. FOR MARKET DOMINANT PRODUCTS ) DECLARATION OF META A. BROPHY ON BEHALF OF CONSUMER REPORTS, INC. I, Meta A. Brophy, declare as follows: 1. I am the Director, Procurement Operations for Consumer Reports, Inc. (“CR”). CR is a nonprofit organization exempt from income tax under the Internal Revenue Service Code Sections 501(c)(3), and is headquartered in Yonkers, NY. CR’s business address is 101 Truman Ave., Yonkers, NY 10703. 2. I have worked for CR for more than 31 years and served in my current position for more than 12 years. As Director, Procurement Operations, I oversee all aspects of the CR marketing procurement process, including supplier selection, contract management and supplier relationship management, providing advice, counsel, and services to internal business groups. Additionally, Procurement Operations staff manages all the United States Postal Service business accounts and is responsible for monitoring service, delivery, and expense. 3. I serve as President, Board of Directors, Alliance of Nonprofit Mailers (“ANM”) and have since 2008, and on the ANM Executive Committee since 2005. In my roles at CR and ANM, I have accumulated extensive experience in nonprofit direct mail marketing, manufacturing, and distribution, while working for affordable rates and reliable service from the Postal Service. 4. CR is an independent, nonprofit organization that works with consumers to create a fairer, safer, and healthier marketplace. Founded in 1936, CR has achieved major gains for consumers on health reform, food and product safety, financial reform, and other issues. The organization has advanced important policies to cut hospital- acquired infections; prohibit predatory lending practices; and combat dangerous toxins in food. CR tests and rates thousands of products and services in its 50-plus labs, state- of-the-art auto test center, and consumer research center. CR works for pro-consumer laws, regulations, and practices in Washington, DC, the states, and in the marketplace. CR serves more than eight million subscribers to its flagship magazine, website and other publications. 5. This work, which includes product testing, is costly but important and effective. In the last year, CR test results prompted manufacturers to make positive changes to oven range models, bike helmets, and several strollers and high chairs due to issues uncovered in our labs. While inspecting an SUV, CR discovered a top-tether anchor in one of the seats missing, and notified the automaker, who issued a safety recall. CR buys all of the products it tests at retail, just as a consumer would. 6. Consumer Reports accepts no advertising, payment or other support from the companies whose products we evaluate. We don’t accept free test samples from manufacturers. We don’t allow our name or content to be used for any promotional purposes. Our funding comes primarily from subscribers and donors. 7. CR relies on the U.S. Postal Service to attract new subscribers and donors through direct mail solicitations and to deliver CR’s subscriber mail (Consumer Reports magazine, Consumer Reports on Health newsletter, acquisition promotions or premiums, special interest publications, acknowledgments, bills, and renewal and gift notices). Half of CR’s revenue is generated from print subscriptions and donations acquired through direct mail acquisition, retention, and fundraising campaigns. Our most important classes of mail remain First-Class, nonprofit Periodicals Mail, and nonprofit Standard Mail. CR spent nearly $30,000,000 (13 percent of operating expenses) on postage in the United States in our fiscal year 2016, $32,000,000 (14 percent of operating expenses) in fiscal year 2015, and $34,000,000 (15 percent of operating expenses) in fiscal year 2014. 8. We must attract new subscribers and service existing subscribers in the most cost-effective way possible. Over the past decade, distribution costs have fluctuated with fuel prices. Other goods and services that we purchase through competitive bidding, such as premiums, mail package inserting, list and data costs have remained flat. The printing and paper manufacturing industries have experienced sweeping consolidation and capacity reduction. Decreases in printing prices offset occasional, nominal paper increases. Postage, however, has increased steadily eight out of ten years. For the classes and categories of mail that CR uses, the price increases often have exceeded the overall rate of inflation as measured by the Consumer Price Index. 9. Postage increases reduce CR mail volume. When we don’t grow our acquisition base through direct mail, we also don’t renew a commensurate number of subscribers and donors through the mail, and we don’t send as many publications through the mail. It goes without saying that when we cut mail volume, the entire supply chain that serves our needs sees their revenue and income reduced. 10. During the recession that began in 2007, CR experienced a falloff in subscriptions and revenue that required taking a number of austerity measures. Among our responses was a de-emphasis of print publications in favor of digital media. In 2015, CR discontinued two smaller print publications, ShopSmart magazine and the Money Adviser newsletter. Shuttering these monthly publications meant the elimination of 6 managerial and 11 union positions. ShopSmart fulfilled 324,000 and Money Adviser 135,000 print subscriptions. 11. Consumer Reports magazine serves four million print subscribers, who prefer to receive magazines and other sources of information through the mail. CR’s ability to find and keep subscribers and donors who want to receive print publications and communications would be greatly impaired, however, if the CPI cap were to be removed and the Postal Service freed to increase postal rates faster than inflation. Above-inflation rate increases would accelerate diverting resources away from direct mail operations. 12. It is for these reasons that Consumer Reports supports the existing rate regulatory system that adheres to the CPI price cap as its centerpiece. Allowing the Postal Service to increase postal rates faster than inflation is likely to have a negative effect on our ability to acquire and retain customers and donors who support our operations and allow us to work with consumers to create a fairer, safer, and healthier marketplace. VERIFICATION I declare under penalty of perjury that the foregoing is true and correct. Executed on March 9, 2017. _______________________________ Meta A. Brophy Consumer Reports, Inc. BEFORE THE POSTAL REGULATORY COMMISSION WASHINGTON, D.C. 20268-0001 STATUTORY REVIEW OF THE SYSTEM ) FOR REGULATING RATES AND CLASSES ) Docket No. RM2017-3 FOR MARKET DOMINANT PRODUCTS DECLARATION OF TRACEY BURGOON ON BEHALF OF DISABLED AMERICAN VETERANS I, Tracey Burgoon, declare as follows: 1. I am the Director of Direct Marketing for Disabled American Veterans ("DAV"). DAV is a charitable organization that was incorporated by an Act of Congress on June 17, 1932, and is exempt from federal income tax under Internal Revenue Code Section 501(c)(4). My business address is located at our national headquarters: 3725 Alexandria Pike, Cold Spring, KY 41076. 2. I have worked for DAV for over 19 years, and have served in my current position for over four years. As DAV's Director of Direct Marketing, I manage the charity's direct mail, telemarketing, and direct response television fundraising and outreach efforts aimed at existing and potential donors. I also represent DAV as a Member of the Board of Directors of the Alliance of Nonprofit Mailers. 3. My position requires that I fulfill several postal-related duties in support of DAV's charitable mission. I develop and manage the number of pieces mailed by or on behalf of DAV annually, and I also analyze the value of postage paid by the organization — all with an eye toward generating sufficient financial support from our donor base to support the services that DAV provides to our nation's veterans. In addition, I work with the U.S. Postal Service to manage the performance of our caging operation. 4. As the daughter of a disabled veteran, the wife of an Army veteran, and the mother of an Air Force airman, I am very proud of the work that DAV does for our veterans. DAV helps veterans obtain the full range of benefits available to them and represents claimants before the Department of Veterans Affairs.
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